This is similar to what TV networks do—they supply programs to affiliate stations. Both network and syndication are, indeed, major ways for stations to obtain programing without producing in-house.
However, syndication differs from network affiliation in that the contracts are limited to a specific set of programs, and the station typically get a right to freely schedule the program within certain conditions such as up to three times within a two-year period.
In syndication, the program is exchanged with either money, airtime, or the combination of both. The trade of program with airtime, which is used for advertisements, is called "barter."
There are two types of deals made through syndication, depending on the type of programs circulated. One is the programs already aired by the network affiliates, or off-the-net syndication. The other is the program made for syndication, or first-run syndication. Some quiz shows fall into this category.
Syndication can give viewers the chance to see classic programs again, although they may be cut to allow airtime for extra commercials.